Solectron's Quarter Looks Brighter

The company delays the impact of a production adjustment plan.
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Updated from 9:29 a.m.

Cisco's

(CSCO) - Get Report

lean production push with

Solectron

(SLR)

won't go as far as expected in the current quarter.

Solectron says it will hit or beat its fiscal first quarter guidance, thanks to a delay in a Cisco-imposed cost-cutting move.

Solectron, a Milpitas, Calif., contract manufacturer, said it delayed a new "supply chain" program with Cisco, one of its largest customers. The plan called for Solectron to take on more Cisco inventory. The deal was expected to trim about $150 million off the top line in the quarter ending Nov. 24.

But now, with the production adjustment due to take effect in the "coming quarters," Solectron says it going to meet or possibly beat its prior guidance.

The company's target was a nickel-a-share profit on sales of $2.7 billion for its fiscal first quarter, which ends on Nov. 24. Those numbers are in line with analysts' expectations, according to Reuters Research.

On an earnings conference call Oct. 5, CFO Paul Trufano laid out the potential effects of Cisco's lean plan over three quarters. "I would hope that we would see a restoration of that $150 million in the second quarter, maybe a little upside bump by the third quarter," he said. Now that schedule is presumably pushed back by a quarter or so.

On Friday, Solectron rose 11 cents to $3.38 and Cisco tacked on 21 cents to $26.91.